This sounds so hard, I'm sorry you aren't coming back next year. BUt you never know... what if something works out after all? Do you maybe have some options? Applying for scholarships? Getting a summer job? Maybe something will surprise you and you will be able to come back!
You're not failing your PDoc by not finishing...but I hear you that it feels that way. Just tell him... straight out...what your situation is. I am sure he will understand. Let him know how much you appreciate him. Maybe you could give him a card? I bet that things will go more positively than what you fear.